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First-time buyer – the answers I really wanted

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Do you really know what happens when you buy a house? I thought I did but it turns out I had a lot of questions. Here are the answers to my most embarrassing head-scratchers to save you the trouble asking.

Knowledge is a funny thing. Working where I do I could wax lyrical about the EU rules surrounding mortgages and what they mean for you, and the range of schemes available for first-time buyers. But now it’s come to buying a property with my boyfriend, I find the reality of it rather more confusing.

With our list of questions about power sockets, damp and double glazing in our sweaty mitts, we found a flat we adore last week. But, err, what actually happens next?

My eight mortgage questions answered

1. What should come first – the property or the mortgage?

Right, so we love the flat. My boyfriend has spoken to a mortgage broker and we have a rough idea of what we can afford and have a mortgage in principle drawn up. But is this enough?  

In a word, for now, yes. You need to have agreed the purchase of a property before a formal mortgage application can begin – lenders rely on the property you buy as security if you can’t later afford to make the repayments. So you need to have an offer accepted before applying in full.

Our mortgage in principle doesn’t guarantee our mortgage application will be accepted. But, more often now, you will find vendors ask for one before they consider your offer.

2.Can we negotiate from the asking price?

You often hear about people negotiating huge amounts off the asking price, but it always makes me feel a bit uneasy. I’m not a natural haggler, especially when it comes to big bucks. Is it a good idea or not?

Well, there’s no definitive answer – it all depends on your own personal situation. You need to consider your strengths and weaknesses. As a first-time buyer, my position is actually fairly strong, as I don’t need to sell a property before I can buy.

You should ask the estate agent whether there are any more offers on the table; how long the property has been on the market for; and what the sellers’ current position is. All of these questions can help you work out how likely it is they will drop the price.

For example, as we know the sellers have already have found a house they wish to buy, we know speed is important to them, which puts us in a good position to negotiate.

3. What happens after we put in an offer?

The truth is, once we’ve told the estate agent we’re putting in an offer, I’m unsure of what happens next.

Well, if we do put in an offer which is accepted, then we can work on finding a solicitor or conveyancer to deal with the sale. A conveyancer is a specialised property lawyer, who helps with the legal process of transferring one property to another. Our estate agent has suggested one, but we don’t have to go with their choice – we don’t even have to go local. We could use a solicitor or conveyancer outside London if it’s going to be cheaper (which it probably would be, given the whole ‘living in London’ thing).

4. Is buying together the right choice? What if we split up?

On the most basic level, we want to be completely sure buying together is the absolute best choice for us. Nothing like a big financial decision to make you deal with your relationship pragmatically.

Obviously, if you buy together, you’re taking both of your salaries into consideration, and that means you can borrow more.

But realistically, for us, we wouldn’t be able to afford to put in 50-50. This is where tenants in common come in – an agreement which lays down what proportion of the property each of us own. As my boyfriend is putting in the majority of the deposit, this would mean if we do break up (this mortgage stuff is fun, eh?) this would be taken into consideration. 

Our solicitor or conveyancer could put in the terms of contract what proportion of mortgage repayments we are putting in, and any increase in equity to the property, which will give us peace of mind that we’re doing everything fairly.

5. Is it the mortgage or the deeds which show who owns a house?

Yes, I really did muse about this one. What the heck is a deed and should I care about it?

So, the title deeds are legal documents which show who owns the house. Legally, it is important to help establish ownership.

The mortgage shows how you are paying for the house. So, if you bought your home outright then 1) I’m very jealous and 2) You would still have title deeds but no mortgage.

6. Does the mortgage move with us if we move house? What if the new property is more expensive?

I love London, but I’m not sure if I want to always be here. And even if I was, it’s unlikely we’d stay in the same home forever.

Fortunately, many mortgages are now portable, so moving house shouldn’t be a problem, but we should check with our lender before deciding on a mortgage product.

If we need to borrow more to cover the costs of the new home, it could be a good time to look at remortgaging.

7. What should I be avoiding doing in the run up to getting our mortgage secured?

There are always horror stories about strange reasons someone hasn’t got their mortgage secured, and some of them seem really perverse to me. I don’t want to be rejected for a silly reason!

Well, it seems the main thing to avoid is not applying for lots of other credit around the same time, or having a lot of unused credit available. I do have a credit card, but I pay it off every month, so this should be fine. I did also have an overdraft, which had been dipped into occasionally, but I’ve closed it. I don’t want lenders to think I can’t manage my finances.

8. What could cause the mortgage to fall through? Would we lose money?

Until we exchange contracts with the seller, there is always the risk of losing the property and that’s something we’re just going to have to swallow, I think.

Once we have a solicitor and a mortgage, it will be time to get surveys – a valuation survey to check what the flat is worth, and a building survey to check for any structural repairs. More money (sigh), that could be lost if something happens down the line, or if they discover something that means the sale won’t go through.

We could also get ‘gazumped’ (a rather cute-sy term for something horrible – if someone offered a higher price than us and the seller went with them instead), or the seller could decide to withdraw the property from the market. Or, there could be a problem with our mortgage application. Or, we could decide it’s all wrong, and that we don’t want to go ahead. Until the ink is on the contract we aren’t legally bound to the property. Gulp.

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